Category Archives: Procurement Financials

I have researched this topic and correlated procurement ROI with procurement savings (a major subset of the “R”) over hundreds of real-life benchmarked firms, and what I found is that the correlation is expectedly very high…to a point. Once you exceed an ROI of about 3, the correlation weakens and then ends. In other words, some procurement organizations get very expensive and inefficient without seeing a commensurate return on that investment. Others, however, spend somewhat more, but do get disproportionately high payback from those investments.

Spend Matters welcomes this guest post from Vroozi. As young companies experience success and begin to grow, they often discover that many of the seemingly smaller facets of the business process have been overlooked due to the minute number of employees involved in the procedure. As these companies begin to scale, these smaller aspects can develop into larger problems. Procurement is a prime example of a process that is too often overlooked and can cause issues within organizations that scale quickly without the proper system in place.

Last week, I attended Taulia’s Annual Customer Conference (Taulia Connect) in downtown San Francisco (see previous coverage from the event at the end of this post). I’m actually saving the best for last in terms of discounting and supplier adoption metrics that Taulia shared – check back next week on Spend Matters PRO for our analysis of enablement and adoption data from more than 3,800 suppliers. But in the interim, I thought it would be worth sharing a few company trends of note that we’ve not covered yet.

In the last installment of our 50 Shades series, we discussed the importance and value of mining the transactions that disburse cash to suppliers. We also discussed the “perfect invoice” to support the frequently used metric of the “perfect order” (i.e., right product in right quantity at right quality levels at right place and time – with the right invoice information), and how the transactional analysis part of spend analysis can help analyze this. But, what makes an order perfect? From a payments standpoint, is it just paying on time with accurate information? What about the ability to improve working capital and/or lend money to your suppliers in the form of early pay discounts (and/or supply chain finance)? Whatever your answer is, you’re going to need an accurate payment due date.

Picking up where we left off in our interview with Traxpay’s John Bruggeman, we come to the potential “killer apps” for dynamic payments and also consider the changes in efficiency that will come as cash moves through the supply chain more efficiency. See also our first, second and third installments in this series as well. Enjoy!

Our interview series with Traxypay’s John Bruggeman continues today as we begin to get into the nitty-gritty detail of what comprises dynamic payments – and how dynamic payments differ from traditional static bank and card payments.

Earlier this month, the Mastercard and Basware teams shared with Spend Matters and Trade Financing Matters a very comprehensive survey-based research study the two firms (and partners) had completed over the summer months. The study, based on responses from more than 1,000 finance professionals (on both the accounts receivables and accounts payables side of the fence), provides a very global view of where cash management and payments stand today (respondents from 10 countries are represented in the data set, and each country had approximately 100 responses). The survey participants were best represented by the SMB market segment (e.g., only 11 percent of respondents had 5,000 or more employees). In a series of posts exploring the data and findings, the Spend Matters team will highlight some of the more useful elements that the research surfaced as well as select analysis and recommendations by the authors. We’ll share some of our insights as well.

We move into the start of a new academic year in many parts of the world, children try on their new school uniforms, and summer inexorably turns into autumn. And the thoughts of procurement people turn to matters of great import – such as whether the Proactis share price can keep rising and why Hubwoo’s just doesn’t seem to move at all.

Yes, another month has gone by, and it is time to review Spend Matters' virtual stock portfolio, made up of 21 stocks in firms that have a procurement content to their portfolio. Peter Smith and Jason Busch have been tracking them all through 2014 in this Spend Matters Plus series to get a sense of where the market for firms in this industry is going. They then chose their preferred portfolios from those stocks, using an imaginary $1 million initial fund each. Jason focused on just eight firms; Peter spread his risk with 14.

In this introductory analysis, we begin our exploration of how to wring every bit of value out of spend data. At every level or ‘shade’, we will describe the spend-related analysis (i.e., its scope and the approach used to attack it), the value of it, the challenges in doing it, and some methods to overcome those obstacles. In level 1, we'll start with basic Accounts Payable (A/P) spend analysis by supplier – the very basics (this is absolutely essential). Let’s jump in!

So now we move into the dog days of August. The UK has been sweltering, by our standards at least, in hot, humid weather, punctuated by the occasional biblical thunderstorm. And with that note of foreboding and doom, it is time to return to the Spend Matters stock portfolio challenge for the year of 2014. Regular readers will know that we identified a portfolio of 21 shares with a procurement content and interest in order to track their performance and get a sense of where the market for “our” firms was going. Jason Busch and Peter Smith then chose their preferred portfolios from those stocks, using an imaginary $1 million initial fund each. Jason focused on just eight firms; Peter spread his risk with 14. It's not been the best of months. Peter Smith, managing director of Spend Matters UK/Europe, provides an update on which firms are doing well and which ones less so in the latest installment of this Spend Matters Plus series.

We continue to be surprised at some of the funding rounds and public company valuations in the sectors of procurement and trade financing (receivables and payables financing). However, Taulia is one of the few vendors that I’d bet my own money on to grow into what is a curiously high valuation based on historical – even historical tech – norms. It’s my estimate that the recent Taulia valuation round was done on a valuation multiple roughly around 15 times trailing top line numbers. I base this multiple on a napkin sketch of Taulia’s current accounts and business activities (including program adoption) and a WSJ blog pegging the overall valuation at $200 million.

Remember to register for our webinar tomorrow titled "A Sector in Turmoil? Challenges for Procurement in the Financial Services Industry," sponsored by the procurement software and solutions provider SciQuest. That’s this Thursday, May 8 from 9 to 10 am CDT (mid-afternoon of those of you in Western Europe). Along with SciQuest’s Lindsay Sloan, I’ll be looking at the issues and challenges for procurement in the sector and proposing some steps procurement professionals might want to consider.